Luxury Brands Leaving the Bund for Smaller Cities

Fear of over-saturating the market has top luxury brands fleeing the Bund retail complex in Shanghai.

Deng Yide, CEO of Bund 18, has said that stores like Giorgio Armani and Dolce & Gabbana – which have left Bund 3 and Bund 6, respectively – no longer need a prestigious location in Shanghai to boost their image in China. Now, they need to push sales nationwide.

Want China Times reports that Bund sales have been steadily declining, and that analysts have noted that sales are dropping across first-tier cities, where popular brands are “the victims of their own success.” They report that sales of French brands, like LVMH, have fallen 5 to 10 percent on average each year.

However, sales of luxury brands are rising drastically in second- and third-tier cities, where more and more buyers are gaining a taste for goods they have never owned before. Shenyang, in China’s Liaoning Province, now hosts 61 international luxury brands. The city is fourth in sales behind Beijing, Shanghai, and Hangzhou.

As smaller cities pick up stores, the Bund is watching the market. “The situation might get worse,” Deng said, “we are prepared for the worst scenario – that is when Cartier and Ermenegildo both pull out.”